ECONOMY

German finmin says Greece in better shape than expected

Greece is in better shape then most would have expected a few years ago and Athens’ reforms are starting to bear fruit, German Finance Minister Wolfgang Schaeuble told the German parliament, which voted on Thursday to extend Greece’s bail-out program.

German lawmakers agreed to an extension of the aid package for two months, as expected, and backed the launch of European Commission negotiations with Athens on providing a precautionary credit line to support Greece as it returns to credit markets.

“Reforms are beginning to bear fruit for the people of Greece. The labor market reforms have made the country more competitive … This year Greece will have a budget deficit within European Union rules,» Schaeuble told German lawmakers.

“In 2012 Greece saw its gross domestic product fall 7 percent. This year it is expected to grow 0.6 percent and next year growth it is forecast to accelerate further. The country saw a higher rate of growth in the last three quarters than the euro zone average.”

“If the reforms already underway in Greece are continued then Greece can have further successes,» he added.

Greek lawmakers failed to elect a new president in a first round of voting on Wednesday, in an election which its euro zone partners fear could trigger trouble, though it is the political rather than the financial fallout which is uppermost in their minds.

[Reuters]